Friday, October 12, 2012

Alaska’s Future Begins Now

Ann Lovejoy

Your car goes where your eyes go. If you look at the wall beside the roadway, you crash. So, what’s the solution? Look at the route to get back on the roadway and away from the wall, of course. From a business perspective, this means we must move away from declining product or service lines toward new service or product lines. We sometimes call this innovation, responding to the market, staying current, focusing on customer needs. All these buzzwords simply say we are externally focused on product cycles. We make decisions like the country western song tells us: “know when to hold ‘em, know when to fold ‘em.”

A typical product cycle looks like a bell curve. In the early part of the cycle, the company researches, designs, and pilots the new product. There’s an upward slope as sales increase; the product passes break-even point. Near the top of the curve, the product is said to be “mature.” After the peak, product sales decline when customers don’t replace, buy from competitors, or find alternatives in the market.











  



Inflection point screams decline = time to take action!
  • As an organization’s product or service cycle moves up the curve during expansion -- opportunity and revenue are abundant.
  • New or improved offerings must be released to match competitors’ cycles.
If the organization does not continuously create new opportunities, the down side of the curve is the loss of customers, revenue and inability to sustain the business. Skillful leaders ramp up investment and design for the next product cycle. We overlap product or service cycles. As one product declines, the next one is starting to be profitable. That way, we are less likely to fall into crises, there’s always a way to get revenue. We make a diverse portfolio of ways to stay in business. One point is really important: no one can invest in everything all at once – there’s not enough money or people to do it. Resources are scarce. We use the decline to give us cash to fund the next cycle.

Think about Apple computer, for example – they deliberately cycle product release windows so break-even from the new product overlaps the next product cycle:












We achieve more when we don’t blast buckshot at the wall. As a product cycle begins to decline, we honestly admit that’s happening. Then we research, design, and implement the next one, then the next! This perspective holds for a single human being, a company or a state. The difference is merely scale. If I decide to complete a single task or learn a new skill – it doesn’t take very long. If I thrash around with many skills or tasks, I get overwhelmed and give up.

For the past decade Alaskans have listened to tax-debate arguments about a single product. What if we looked at the declining light-crude oil product curve differently? What if we said, “Ok, that’s our declining cash source?” In 5 years, what is the next product if we planned and invested starting now?

Alaska has multiple opportunities which appear to be starved for money and attention. Extraction and resource product cycles are 50 years long! The next cycle may be heavy crude, coal, gas. After that, energy product cycles may include one, some or a mix of hydroelectricity, wind, geo-thermal, tidal cycles. These are sustained and supported by money from the historical, declining products.

The future begins now. Ask your legislators to list alternatives they are truly committed to championing. Ask, “how’s that single declining product cycle working for you?” Help change the direction we are traveling and do what passionate, positive, future-focused Alaskans know will work.
-------------------
Ann L Lovejoy has been an organizational transformation consultant, process leader and officer in Fortune 500 companies for over 20 years. She currently lives in Anchorage and may be contacted via Linkedin.com or all@creativeintermedia.com